SC ruling on larger IRA a boost to federalism shift — solon

The Supreme Court (SC) ruling effectively increasing the Internal Revenue Allotment (IRA) of local government units (LGUs) will be a huge boon to these provinces in the run-up to the impending switch to a federal system of government.

Camarines Sur 2nd district Rep. LRay Villafuerte made the statement, noting that the SC decision will tremendously boost the fiscal autonomy of provincial, city and municipal governments.

Villafuerte is among the more vocal supporters of President Rodrigo Duterte’s push to “federalize” the Philippines, a move that is seen to hasten development in the countryside.

Given that this landmark decision of the High Tribunal would, once implemented, help spell the financial viability of all would-be federal states under the impending new government structure, Villafuerte called on the Department of Budget and Management (DBM) to work out right away a viable plan on the prompt release of unremitted IRA outlays of LGUs since 1992.

The amount is estimated to be P800 billion over the 2010-2016 period alone.

“We commend the Supreme Court for this landmark ruling as this would be of immense help in boosting the economy of LGUs once we commence the shift to a federal system of government. A much higher IRA share would certainly boost the fiscal autonomy of LGUs ahead of the imminent switch in government structure from the presidential to the federal system,” the Bicol solon said.

Villafuerte expressed the hope that the DBM would heed the SC decision, given that President Duterte himself is a former local government executive who is aware of the importance of the IRA in financially empowering LGUs and how this would help jumpstart the shift to federalism.

He made this appeal to the DBM as he lauded the SC for its landmark ruling last week stating the computation of the IRA should include all tax collections—including those earned by the Bureau of Customs (BOC)—instead of just the revenues from the Bureau of Internal Revenue (BIR).

“Hence, I call on the DBM to immediately heed the precedent-setting Supreme Court decision stating that the IRA share of LGUs be sourced from all national taxes and not only national internal revenue taxes,” said Villafuerte, a vice chairman of both the House committees on appropriations and local government.

According to him, one key ingredient for the success of the federal shift is the greater fiscal autonomy of LGUs. This would allow them to chart their respective development programs and give them adequate financial resources to bankroll their own projects designed to spur local economic growth.

Villafuerte, a three-term Camarines Sur governor before his 2016 election to the House of Representatives, also urged the DBM to work out a plan on how it will be able to give out the full IRA due LGUs since 1992 based on the SC ruling.

“We call on the DBM to come up right away with a viable plan on how the IRA backpay could be efficiently distributed immediately to LGUs,” he said.

Citing estimates by Batangas Gov. Hermilando Mandanas and former Senate President Aquilino Pimentel Jr., the IRA based on all national taxes that were withheld from LGUs amounted to about P800 billion from 2010 to 2016 alone.

As then-chairman of the League of Provinces of the Philippines (LPP)–the organization of the country’s governors–during the former Arroyo administration, Villafuerte was among the staunch backers of the advocacy of Mandanas and the late Bataan Gov. Enrique Garcia Jr. for the automatic allocation of the LGUs IRA as so provided in the 1987 Constitution.

Mandanas first filed a petition on this IRA share of LGUs during the Arroyo presidency and, as a Batangas congressman, filed another case before the High Tribunal under the Aquino administration calling for the immediate release of the IRA backpay of local governments.

“As LPP chairman at that time, I fully supported this initiative by Gov. Mandanas and the late Gov. Garcia to ensure the automatic appropriation of the IRA under the national budget,” Villafuerte said.